State: Pontiac school district in deficit, aid likely to be held

The Pontiac school district is about to lose its April 20 state aid payment for school operation because it has not reduced expenditures enough to meet the first part of the state-approved deficit elimination plan, said Jan Ellis, spokeswoman for state Superintendent Michael Flanagan office Tuesday.

. "We were informed that because there were questions about our progress, the MDE would withhold our April 20 state aid payment until we have responded to their queries. We are expecting that any and all questions will be addressed within the next three to four days.

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"The MDE has assured us that they will release our state aid payment immediately after reviewing our responses. Despite the state's withholding of our aid payment, we will still be able to meet payroll and other obligations."

The plan requires the district to cut more than $24 million in expenditures by 2014. Burt said 85 percent of the budget revenue is spent on teachers, the largest employee group and that is where the most significant cuts must be made to balance the budget.

However, administrators and teachers are at a standoff with no contract agreement in sight as Flanagan watches to determine whether or when the state will have to step in and take over to get the district out of deficit.

If the requirement isn't met, the district will not receive state school aid beginning with the Friday, April 20, payment of $1.25 million, Ellis said in a statement in answer to a request from The Oakland Press about what would happen if the district doesn't meet the plan condition.

"Pontiac school district has yet to meet the conditions of their district-developed deficit elimination plan, therefore, their April 20 and future state school aid payments will be held until such time that the conditions are met," said Ellis.

According Ellis the Michigan Department of Education approved a deficit elimination plan that the Pontiac school district itself developed.

The only requirement that the MDE made was that the district is required to reduce projected expenditures to the levels detailed in this plan.

If the district is unable to achieve planned staff reductions and wage concessions, it will be expected to reduce expenditures in other categories in order to meet the fund balance targets entailed in this plan.

Failure to meet the targeted deficit reduction in any year of this plan may be considered an indication of a serious financial problem.

"There was another contingency in the approval of the district-developed plan, that: If the district, prior to the April 2012 state school aid payment, does not implement layoffs and/or wage concessions sufficient to effectuate the 2011-12 budget reduction the district's plan said it would implement immediately, the approval is rescinded and the department is required (by state law) to withhold state school aid payments beginning with the April payment," Ellis said.

At this point, that hasn't happened, according to the statement.

Burt announced 95 layoffs by the end of the school year. Of those, 43 teachers were laid off Monday, in the middle of a school year and two weeks before report card marking.

For teachers, there is great frustration after watching reports of mismanagement of funds released in 2009 and embezzlement and doubling of the deficit the two years following that. Pontiac Education Association President Aimee McKeever said it isn't fair for the administration to take out the actions of administration and board on the teachers, students and the community.

For Burt, there is also frustration. He was called in to the district in November by the Pontiac Board of Education to deal with the state requirement to reduce the deficit and keep the district running under local control while being ambushed by mismanagement of funds of administrators before him.

Burt said no one can argue that there has been a problem with mismanagement of funds in the past, but new guidelines have been put in place to prevent further problems, he said. And no matter what the problems were, "The fact is we are at the point where we have a $24 million deficit and it has to be addressed.

"We are asking all employee groups to work with us for better ways to become effective," he said.

Burt said in a recent column that the first deficit elimination plan was rejected by the state because it was not aggressive enough. In March, Flanagan approved a revised plan.

Failure of the plan means the takeover by an emergency manager, Burt said.

The administration has proposed a 10 percent salary reduction, suspension of longevity and retirement pay, as well as the elimination of tuition reimbursement, and Burt said the PEA has rejected the proposal.

McKeever contends the district had a tentative agreement under a previous interim superintendent, before Burt was hired as interim.

However, the two sides don't agree on what parts of the expired contract should continue into the next one.

Burt said changes in state law prohibit negotiations on some items that were bargained in previous years, including such things as a health care plan, dismissal of employees with seniority, school starting times and class sizes.

McKeever said since those things are already in the contract they don't have to be negotiated, therefore, they should remain in the new contract. She said there was no question about leaving those portions of the contract in place under Brown and it should be that way now.

"I have members that have to go to school, have to pay tuition, have to pay health premiums. We can't afford a 10 percent reduction in pay. Why does restitution have to come back on teachers when school board is responsible?"

McKeever suggests the board give up other things that will save money, such as people with contracts and lawyers.

Burt said a state mediator has been called in to help. McKeever said he has been at the meetings twice but the two sides are not any closer.

Fact-finding will be next if this doesn't work.

If there still isn't an agreement, the district eventually will have to implement a contract that is the "last, best offer," Burt said.

To meet the deficit elimination plan, more layoffs will be called for next year and possibly another school closing the year after because no new revenue is in sight and student enrollment continues to decline.